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Industry body Assocham today asked the government to further raise the rail passenger fares of to finance the huge investments required for modernisation and safety of Indian Railways.

The chamber also asked for a two-year moratorium on introduction of new trains, besides immediate grant of Rs 20,000 crore to the Indian Railways.

In a pre-budget memorandum to Railway Minister P K Bansal, Assocham said these steps would help put the ailing Indian Railways on track again towards total modernisation and capacity augmentation.

"Refusal to revise passenger fares for the last 14 years had brought the country's largest transportation system to the perilous financial situation with almost zero surplus and severe fund crunch," the chamber said.

"This had led to huge slippages in various safety related measures and rolling stock and track improvements that were urgently needed," it added.

The chamber asked the government to announce a Rs 10 lakh crore modernisation and expansion programme for the railways "and link it with a fare rise to finance such total change".

"Such linkage could help gain public support for the fare rise that was inevitable if the railways are to be rescued from a serious crisis," it said.

Assocham called for creating a consensus for raising passenger fares across the political divide.

Earlier this month, Railway Minister Pawan Kumar Bansal had announced an across-the-board increase in passenger fares, including sleeper class, for the first time in 10 years.

It has also reiterated the need for Railway Tariff Regulatory Authority (RTRA).